Property buyers are banking six-figure profits in mere months by buying cheap, rundown homes and quickly re-selling them for double the price.
Booming house prices in one pocket of regional Western Australia have put a previously unloved suburb on the map with property buyers looking to make quick cash.
Rangeway, a suburb of Geraldton, has recorded the fastest home price growth of all Australian suburbs over the past five years, with the house prices almost quadrupling in that period.
Five years ago, a typical house in Rangeway cost $72,500, but the median price has since surged to $280,000 – an increase of 286% in that period.
That rapid growth has caught the attention of property investors and flippers, who are now snapping up as much as 90% of houses that hit the market, according to local real estate agents.
These buyers are purchasing the cheapest properties in town — many of which were rundown government-owned houses — before renovating and relisting for much more.
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This boarded-up, unloved house in Rangeway, a suburb of Geraldton, sold for $170,000 last year. Picture: realestate.com.au/sold
An example is 2 Sherlock Way, which was purchased for $170,000 in September last year.
The three-bedroom timber and fibro house, which was offered to the market in original condition, was pictured in the listing with boarded up windows and overgrown grass in the front yard.
“With some TLC, this property can be transformed into a stunning residence or lucrative rental opportunity,” the listing stated.
A cosmetic renovation helped boost the sale price to $315,000 – an increase of $145,000 in three months. Picture: realestate.com.au/sold
Three months later, the now-unrecognisable home was back on the market for almost twice the price, having been cosmetically renovated with freshly painted walls, new flooring and an updated kitchen. The original bathroom was retained but updated with a coat of paint.
“This property has undergone a complete transformation, boasting modern updates while retaining its charming fibro construction,” the new listing stated.
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Marketed as a “fantastic opportunity for savvy investors,” the home had one more added kicker – a 12-month lease paying $420 per week, which is a little higher than Rangeway’s median asking rent of $390, according to PropTrack data.
The house sold for $315,000, which represented a $145,000 increase in just three months.
Selling agent Will McKenzie of Professionals Geraldton said flipping properties was becoming increasingly common as a result of rising rental prices as more people sought homes in affordable areas.
He said many investors were either re-listing renovated houses for quick profit, or offering homes for rent for much higher yields.
This rundown home in need of some TLC sold for $181,000 in September. Picture: realestate.com.au/sold
“You could buy them for about $140,000, spend $50,000 and sell them for $300,000 or put a tenant in for $450 a week,” he said.
Another Rangeway property that was recently flipped for profit after a quick transformation was 3 Petchell Street.
Offered to the market in similar condition — with boarded up windows and overgrown grass — it was snapped up in September for $181,000 within days of hitting the market.
After a fresh paint job and internal renovation, the house was sold after less than four months for $352,000 – growing in value by $171,000. Picture: realestate.com.au/sold
Less than three months later it was for sale again, this time with a fresh coat of paint, newly renovated interiors and a tidy yard.
It sold for $352,000 in January – a figure that was $171,000 more than when it traded hands just months earlier. It’s since been listed for rent for $470 per week.
On the market now for offers over $299,000 is 4 Lantana Street, a three-bedroom house that’s had a cosmetic renovation throughout.
This rundown house sold for $168,000 late last year. Picture: realestate.com.au/sold
Previously sold for $168,000 in November, the listing at the time showed the internal walls of the house were riddled with holes, windows were boarded up and fence panels had been removed.
But it’s since been tidied up with a brand new kitchen, updated bathroom, fresh flooring and paint.
The home was in a sorry state, with boarded-up windows and damage to internal walls. Picture: realestate.com.au/sold
The listing advises it has a rental appraisal of $400 per week.
If it sells for its listing price of $299,000, the current owners stand to gain $131,000, excluding renovation and holding costs.
After a quick cosmetic renovation, it’s back on the market for offers above $299,000. Picture: realestate.com.au/buy
PropTrack data shows 82 of the 632 houses in Rangeway changed hands in the past year, representing a turnover rate of 13% – about three times the national rate.
Mr McKenzie said the influx of new buyers and renters was changing the character of the suburb.
“What we are finding is with all these sales and rents going up, you’re kind of attracting a higher quality of tenant,” he said. “It’s slowly changing in the right direction.”
Rangeway is still one of the most affordable suburbs in Australia, despite prices rising by 286% in the past five years. Picture: realestate.com.au/sold
While growth remained strong, prices couldn’t keep rising at that rate forever, Mr McKenzie said.
“Prices will get to a point where you can’t charge any more rent or investors see other opportunities in other places,” he said.
PropTrack data shows that while home prices in Rangeway have almost quadrupled in the past five years, on a 10-year time-scale the growth rate is a more modest 45%.
In that time the median sale price declined from $193,750 in 2015, to $72,500 in 2020, before surging to the current median price of $280,000 during the most recent boom.
